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Interested in gaining exposure to the recovering consumer? We ran a screen on the retail industry you may be interested in.

We began by screening the retail industry for stocks that appear undervalued relative to earnings growth, with PEG below 1.

We then screened for those with strong profitability compared to industry peers, with higher gross, operating, and pretax margins than their industry averages by at least 5% on each margin. This indicates that these companies are taking a greater percentage of their revenues as profits and that they also have stronger control over their cost structures.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis. (List sorted by difference between pretax margin and industry average.)

1. Vera Bradley, Inc. (VRA): Engages in designing, production, marketing and retailing of functional accessories for women under the Vera Bradley brand. Market cap at $818.71M. Most recent closing price at $20.20. PEG at 0.7. TTM gross margin at 57.92% vs. industry average at 50.36%. TTM operating margin at 18.85% vs. industry average at 12.38%. TTM pretax margin at 20.33% vs. industry average at 11.49%.

2. True Religion Apparel Inc. (TRLG): Designs, develops, manufactures, markets, distributes and sells apparel in North America, Europe, Asia, Australia, Africa and South America. Market cap at $686.01M. Most recent closing price at $26.60. PEG at 0.72. TTM gross margin at 64.69% vs. industry average at 50.36%. TTM operating margin at 18.58% vs. industry average at 12.38%. TTM pretax margin at 17.86% vs. industry average at 11.49%.

3. Jos. A. Bank Clothiers, Inc. (JOSB): Designs, retails and direct-markets men's tailored and casual clothing and accessories. Market cap at $1.18B. Most recent closing price at $42.34. PEG at 0.84. TTM gross margin at 64.52% vs. industry average at 37.63%. TTM operating margin at 15.67% vs. industry average at 10.48%. TTM pretax margin at 15.66% vs. industry average at 9.78%.

4. Fossil, Inc. (FOSL): Designs, develops, markets, and distributes fashion accessories worldwide. Market cap at $4.23B. Most recent closing price at $68.33. PEG at 0.75. TTM gross margin at 58.11% vs. industry average at 50.36%. TTM operating margin at 17.7% vs. industry average at 12.38%. TTM pretax margin at 17.06% vs. industry average at 11.49%.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

Source: 4 Undervalued Retail Stocks With Stronger Profitability Than Peers